SRC-SLL S.B. 1940 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 1940
By: Carona
Economic Development
4-26-97
As Filed


DIGEST 

Currently, the Texas statutes do not prohibit licensed consumer finance
lenders from offering noncredit insurance and products.  However, even
though lenders may offer non-credit insurance and products, the cost
cannot be paid for out of loan proceeds or made a part of the amount
financed without violating the Texas statute on other charges.  This bill
will provide regulations regarding charges for certain types of noncredit
insurance and products. 

PURPOSE

As proposed, S.B. 1940 provides regulations regarding charges for certain
types of noncredit insurance and products. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 3, Title 79, V.T.C.S., by adding Article 3.18A,
as follows: 

Art.  3.18A.  NONCREDIT INSURANCE AND PRODUCTS.  Authorizes an authorized
lender, in connection with a loan made under this chapter, to charge and
collect a charge for certain types of noncredit insurance or products if
agent licensing requirements and policy forms comply with the applicable
provisions of the Insurance Code  and other insurance laws of this state.
Provides that a borrower of a loan made under this chapter has the option
of including in the amount financed the cost of noncredit insurance or
products purchased by the borrower under this article if certain
requirements are met.  Prohibits an authorized lender from charging or
collecting a charge for a type of noncredit insurance or product that is
not specified in Subsection (a) of this article unless the commissioner of
insurance authorizes the charge or collection.  Provides that,
notwithstanding Article 3.15 of this chapter, the cost of noncredit
insurance or products purchased under this article, and any gain or
advantage received by certain persons as a result of a charge for
noncredit insurance or products imposed under this article, is not
considered a further or other charge or amount received in connection with
a loan made under this chapter. 

SECTION 2. Effective date: September 1, 1997.
  Makes application of this Act prospective.

SECTION 3. Emergency clause.